Cutting State Grants to Students at Private Colleges: A short sighted tactic

April 17, 2017

A February 19, 2017 opinion piece by Montclair State University Professor Brigid Callahan Harrison in nj.com posits that New Jersey could keep more students in state if only the legislature and Governor would reduce state grant support to students attending NJ independent colleges and universities and increase grants to students attending public colleges:

So as this structure works now, a needy student would receive $2,734 to study at Essex County Community College, but the very same student would receive $12,438 — nearly $10,000 a year more — to study at Drew University. This bizarre system — in which taxpayers subsidize private and religious colleges and universities and penalize students for making cost-saving decisions — could be reformed by allocating a set amount to an individual student based on need, and then allowing that student to use that allocation at the college of his or her choosing.

“Bizarre system?” Really? In light of New York State’s politically expedient, but caveat-ladened decision to make SUNY tuition “free” for those students from families earning less than $125,000 per year, it is appropriate to call out the same faulty logic used here by Professor Harrison – that making public education more affordable at the expense of private education will benefit students and taxpayers alike. It “just ain’t so,” and here’s why:

Montclair State charges about $20,000 in tuition for out-of-state students. Assuming there is no State subsidy at work for those students, the in-state tuition of about $12,000 means that the State is giving EVERY in-state student about $8,000 of support, regardless of need. TAG money received by needy students at NJ public colleges is in addition to this $8,000 state tuition subsidy for every student. Making private colleges less affordable by removing or lowering a grant that is indexed to the federal “Estimated Family Contribution” (EFC) will most likely result in an increased enrollment in NJ public colleges and decreased enrollment at private colleges – not a reduction in out-of-state student migration. Just as will happen in New York, New Jersey will then be forced to subsidize more students – all of whom would get the State tuition subsidy ($8,000) and many of whom would get an increased TAG on top of that. It is, therefore, less expensive for the State to provide grants to help low-income students afford a private in-state college than it is to subsidize an increased number of students in the public sector. That is why many states have need- or income-based grant programs to help residents attend private colleges: it is less expensive for the State to subsidize needy students at private colleges than at the state colleges.

Professor Harrison also misuses the term “need,” when she claims that the “system” could be fixed by “ allocating a set amount to an individual student based on need, and then allowing that student to use that allocation at the college of his or her choosing.” Need is defined as the Cost of Education MINUS the Expected Family Contribution (EFC). Since EFCs are not cost-dependent (that is, the EFC is the same for a family whether the child decides to go to Montclair State or to Drew), the ”need” –and hence the grant eligibility — would be lower at the public institution than it would be at the more expensive private institution. That is as it is now, even though technically TAG is income-based (from which the EFC is derived).

Finally—and words do matter here – Professor Harrison claims that current policies “penalize students for making cost-saving decisions.” Students attending public colleges and universities are making price-saving decisions for themselves – the price they are being charged is less than the price charged at private colleges. That decision actually costs New Jersey more than if they had decided to attend a private college in-state.

New Jersey is the greatest exporter of students not because of the financial aid benefits available or not available to the State’s college students, but because we are a populous state with significantly fewer institutions of higher education compared to neighboring New York and Pennsylvania. To suggest that shifting financial aid away from students who require less in state support to attend private colleges is short-sighted, misses a critical point in the funding of higher education, and is just plain wrong!